Board raised pay while Saab stood still: report
Published: 18 Aug 2011 06:57 GMT+02:00
Updated: 18 Aug 2011 06:57 GMT+02:00
In May, while Saab’s production lines stood still and clouds were gathering over the factory in Trollhättan, mother company Swedish Automobile treated themselves to a raise, according to a report on Swedish TV 4 News on Wednesday.
- New share issue to help raise quick cash for Saab (15 Aug 11)
- Saab unions demand answers from CEO (10 Aug 11)
- Saab staff to be paid after new share issue (03 Aug 11)
“It feels like everyone is out to grab what they can get,” said a Saab employee to TV4 News on Wednesday.
The company has motivated the raise with the explanation that the difficult times since acquiring Saab have generated a heavier workload and that renumerations hadn’t been raised since 2004.
New chairman of the board, Hans Hugenholtz, received a raise of 633 percent, from 147,150 kronor to 611,163 kronor. Others also had their pay increased significantly.
The increase in pay was also paid out retroactively for 2010.
The discovery has raised questions among many as to how ethical it is for the board to raise their salaries when the company is doing badly.
“When you see a company which is obviously limping it is a bit rich for the board of directors to give themselves a raise even if difficult times means a heavier workload,” said Gunther Mårder, CEO of the Swedish Shareholders' Association to TV4 News.
And on Wednesday Swedish authorities also launched an official debt collection probe of beleaguered carmaker Saab, whose bills have been piling up for months, in a step that could end in bankruptcy.
The probe launched Wednesday by the Swedish Enforcement Administration (Kronofogden), only concerns 369,000 kronor ($58,000) in unpaid bills to two suppliers but the agency said it would likely be expanded within the next few days to include claims from 14 other suppliers unless Saab can pay in time.
Kronofogden's Hans Ryberg told AFP the two first suppliers to see their
claims result in an official debt collection probe were Sweden's Infotiv, owed 224,000 kronor, and Norway's Kongsberg, owed 145,000 kronor.
In all, the 16 suppliers have reported that Saab owes them 42 million
kronor but others are likely to soon follow suit and the final sum could swell by dozens of millions of kronor, the agency said.
With its probe, Kronofogden aims to determine if Saab has enough cash or assets to meet its obligations.
"It is not impossible that it has the money since (parent company) Swedish Automobile has conducted a new share offering," Ryberg said.
"If we see that Saab does not have the means to pay its suppliers, they could ask a court that the company be declared bankrupt," he added.
He said it usually took Kronofogden between one and three months after the beginning of its probe to file its report.
Swedish Automobile has for months been seen as scrambling to raise cash to pay suppliers and relaunch production and the carmaker's plant in Trollhättan in southwestern Sweden.
The company has among other things entered a deal to sell and lease back its real estate, and signed deals with Chinese distributors.
On Monday the company announced its third new stock issue, aiming to raise more than 35 million kronor in fresh cash.
"We do not want to push Saab into bankruptcy," Kongsberg spokesman Hans Jørgen Mørland said Tuesday, explaining though that his company wanted to be "formally present" among the suppliers making their claims heard.
Mikael Wickelgren, an economic researcher at the University of Skövde in central Sweden, said Wednesday's news did not change much.
"In practice, nothing has changed. We have known for a long time that Saab is having trouble paying," he told the TT news agency.
"But the symbolic value of the probe is strong," he added.